Here's why Asians could be huge luxury spenders

Are they spending more on what they want?

According to DBS, in general, Asians are spending more on things they want and less on things they need. This follows from continued rapid growth in regional incomes.

Here's more:

The Stones were wrong – Asians are spending more on what they want and less on what they need.

Where is Asia’s consumption basket headed? Pretty much every-which-way, as one might expect given the rapid growth and huge variation in income levels in the region.

Consumption baskets in poorer countries look a lot different than those in richer countries. In general though, rising incomes mean consumers are buying (relatively) less of what they need and more of what they want.

In China, spending on healthcare, transportation and housing is pushing these basket shares north; food and (for now) recreation shares are falling.

In fashionable (and richer) Hong Kong, clothing is the big upward mover. Ironically perhaps, housing expenditures are falling (in relative terms). In Korea, healthcare and education shares are rising fastest. No surprise there.

Everyone in Asia puts a premium on education but Korea’s high income level makes it do-able and, for better or worse, few countries seem to put more stress on education than Korea.

Education and healthcare are also the top movers in Asia’s richest country, Singapore. On the surface, recreation appears to be rising but most of this is attributable to the new casinos and foreign money, not to local consumers.

Ironically, given the seemingly never ending construction of high-end shopping malls, clothing’s share in the Singapore basket is falling. Recreation is Malaysia’s top mover, fol-lowed by spending in restaurants and hotels. Rising incomes are making this possible. Spending on housing is falling (in relative terms) as occurs in most countries with rising incomes.

Thailand is the only country in Asia where food is taking up a larger share of the consumption budget. In the (relatively low-income) Philippines, transportation – traditionally a non-discretionary ‘must-buy’ item in budgets of low income consumers – is still moving north.

Food, however, is moving south as would be expected. Food is also moving south in India, although it’s difficult to highlightany single item that is taking its place.